Applicability of service tax on transporation/ freight charges

[SANDEEP GUPTA]

Sir,

One of my client (Pvt. Ltd. co) who is engaged In providing logistics service to exporter and importers as well. company arrange transport vehicle from the open market, and such agency issue consignment note/ bilty/ lorry slip in fevour of this logistic company. Such logistics company do not issue any consignment note but raise a slip for taking receipt of goods only. Will such services be taxable under GTA or covered under negative list & not taxable at all.

Since transportation/ freight charges of truck, ship and airlines are paid by such company, please state whether liability will arise under service tax.

AI Summary

Reverse charge on freight: payer of freight liable for service tax when logistics firms arrange transport.
Liability for service tax on freight arranged by a logistics company depends on who is 'paying or liable to pay freight' and on whether the company acts as principal or agent. If consignment notes are in the logistics company's name or it pays freight as principal and bills customers (including a margin), tax may be payable under reverse charge or as part of a bundled taxable service. Absence or change of nomenclature of a consignment note does not automatically negate GTA taxability. Cenvat credit is available only where a nexus between the GTA input and taxable outputs is established.